Bauer: Suspend gasoline sales tax

Democrat's call criticized by GOP leader as fiscally irresponsible.

Democrat's call criticized by GOP leader as fiscally irresponsible.

August 03, 2006|MARTIN DeAGOSTINO Tribune Staff Writer

INDIANAPOLIS -- House Minority Leader B. Patrick Bauer, D-South Bend, said Gov. Mitch Daniels should suspend the state sales tax on gasoline until lawmakers can permanently remove it next year. Bauer said the moratorium would save consumers about $150 per year at current retail prices, which he described at "crisis" levels. "This has gone way too far," he said. "People are hurting. Middle-class and poor people need relief (just) to get to work." Bauer said only seven states apply the sales tax to gasoline, which he compared to other necessities that Indiana does not tax, such as food and medicine. He said Indiana survived the loss of sales tax revenues on those items and could likewise manage its budget if gasoline were not taxed. He estimated the loss at $300 million per year, but said the state has reaped $156 million in additional sales tax revenues since January 2005 because of spiking gas prices. "It's past time we give Hoosiers relief," he said. Daniels had no immediate comment, according to his office. He declined similar calls for a gasoline tax moratorium last year, when prices hit more than $2 per gallon for unleaded regular gas. Speaker of the House Brian Bosma, R-Indianapolis, said Bauer's call is "fiscally irresponsible" as Indiana emerges from years of deficit budgets. He said such actions would cripple the state's ability to launch full-day kindergarten in the next biennium, as Daniels has proposed, and could prevent balanced budgets for years to come. Bosma also said sales tax collections beat projections by just $52 million in the last fiscal year, despite any additional collections due to higher gasoline prices. "If this would have been adopted a year ago," Bosma said, "we would not have a balanced budget today." According to Bauer, some studies show money saved on gasoline taxes would boost other consumer spending and thus boost the economy. He also said Indiana could offset some of the lost revenues with interest earnings on the $3.6 billion cash payment it received from the Indiana Toll Road lease. But he said he would not support higher cigarette taxes to offset a sales tax moratorium on gasoline. Bauer's call echoed a gasoline sales tax moratorium in 2000 that was ordered by Gov. Frank O'Bannon. Republicans criticized the move as a campaign ploy, and Bosma said Bauer's proposal smacked of pandering. But Bauer said Democrats called for a moratorium last year, when there was no election, and want one now to relieve pocketbook pressures on consumers.Staff writer Martin DeAgostino: mdeagostino@sbtinfo.com (317) 634-1707